The recent technological advancement and increased access to the internet have revolutionized how people communicate, interact and do business. With an estimated 47% of the global population using the internet, the internet has become part of our day to day activity. The increased growth in the internet usage has enhanced online trading giving rise to cryptocurrency. Cryptocurrency can be defined as digital money that uses cryptography. See wikipedia definition of Cryptocurrency here.
Cryptography is a process of turning understandable information into a code which is hard to crack and it is used to track purchases and transfers. The first cryptocurrency to be introduced was bitcoin and was established in 2009. However, other cryptocurrencies have been established since then and as more and more people continue to embrace the use of the internet for trading, cryptocurrencies are increasingly becoming popular and their value has increased immensely.
Crypto Currency Trading history
Ever since the inception of cryptocurrency, the value has been rising steadily hence attracting more investors from all over the world. For example, in March 2010, one bitcoin was worth $0.003. In July 2011, the value of bitcoin had appreciated up to $31. However, in December 2011, bitcoin value went down to $2. From that time bitcoin appreciation stabilized up to a high of $1,150 in January 2017. A similar trend can also be observed for other cryptocurrencies though bitcoin values are quite high value.
Factors affecting cryptocurrency value
As the world becomes comfortable with technology, the number of people opting for cryptocurrencies has tremendously increased. Bitcoin oneof the most popular type of cryptocurrency has hit the all-time high in November 2017. Currently, 1-bitcoin is worth $7300 and its value is expected to increase as time goes by. Those people who had invested in bitcoin initially have made a killing out of the appreciated value of cryptocurrencies. But before making a decision to invest in cryptocurrencies, it important to consider the factors that have resulted in the increased value of cryptocurrencies. Some of the factors influencing cryptocurrencies the value in 2017 include:
In 2017, news about cryptocurrencies appreciation in value has gone wild over the mainstream media as well as the social media. With so many people out there going to test cryptocurrency, its value has skyrocketed as a result of increased publicity for instance, the ransomware wanacry’ made bitcoin even more popular since it demanded payments using bitcoins. There so many references on the internet with information about crypto currency. Availability of information online has also made most people to develop trust with crypto currency by countering original myths about crypto currencies.
In an economy, when the demand is higher than the supply, the price tends to go high. One of the main reasons why the value of the crypto currency has shot over the last few years as a result of increased demand. After seeing the trends in cryptocurrency values, most people have decided to give it a hand resulting in increased value. The decrease in demand can also result in fluctuations in prices of various cryptocurrencies.
One of the major factors influencing the prices of cryptocurrencies is the government policies. Initially, after the inception of cryptocurrency, most governments were against it, as a result of the numerous uncertainties that accompanied the invention. However, as time goes by, most countries have appreciated the innovation of cryptocurrencies resulting in an increase in demand of the digital currency. In 2017, the ban on cryptocurrency by the Russian government and the endorsement of the same by the UK government has had an impact on the trading of cryptocurrencies. Additionally, when the IMF releases its reports on cryptocurrencies, the prices are expected to adjust accordingly.
Technology is one of the underlying factors affecting cryptocurrency prices across the globe. Blockchain which is the underlying technology supporting cryptocurrencies has come under scrutiny from technology leaders and finance experts. This is because the technology has a block size limitation which makes cryptocurrencies more expensive to transact with. This will have a significant effect on the prices of cryptocurrencies in coming days.
Governance is closely intertwined with the technology that supports cryptocurrencies which is the blockchain. If the technology is reviewed to reduce the block size in cryptocurrency trading, then the value of cryptocurrencies will move up. Other governance issues such as legalization are also expected to affect the value of blockchain.
With other factors such as competition expected to affects the price of cryptocurrencies, it’s important to look keenly at the above factors when buying cryptocurrencies. In addition, if you are planning to invest in cryptocurrency, check the most stable brand and the one with the most potential to grow.